Disputes Rise Over Insurance Coverage of OEM Collision Repairs in U.S.
Insurance companies in the U.S. are increasingly disputing coverage of Original Equipment Manufacturer (OEM) post-collision repair procedures, particularly safety inspections mandated by manufacturers. This trend is leading to conflicts between insurers and auto repair shops over what constitutes necessary and reimbursable repairs. For example, some insurers refuse to pay for mandated post-collision safety inspections such as seat belt checks or air bag inspections, even when these are specified by OEM guidelines.
Legislation efforts like Montana's SB356, which aimed to require insurers to cover OEM repair processes, have met resistance from major insurers like State Farm. Representatives argue that standard checklists and inspection requirements can be vague or non-specific, potentially increasing insurance costs if insurers are required to pay for all OEM procedures.
Collision repair centers report financial strain and customer dissatisfaction when insurance companies deny payment for certain safety inspections, sometimes leading shops to absorb costs or bill consumers directly. Repairers highlight safety risks from incomplete post-collision inspections, noting that undetected issues like deformed airbags or missing safety components pose significant hazards.
Recent investigations, such as those by the Collision Industry Conference Industry Relations Committee, reveal that a substantial percentage of vehicles subjected to post-repair inspections have severe issues like frame damage that may have been overlooked. Legal cases underscore the liability risks for shops that do not complete OEM-recommended repairs.
Insurance payouts for OEM-required inspections remain inconsistent, with surveys indicating insurers pay for these procedures only about one-third of the time. Major insurers, including State Farm, have lower rates of full payment compliance as reported by repair shops.
The post-pandemic period has seen an increase in disputes over repair process reimbursements, partly due to the rising complexity of vehicle repairs involving advanced driver-assistance systems (ADAS) calibration. Repair shops often contend with large insurance companies controlling significant market shares.
Industry analysis points to growing tensions between cost containment efforts by insurers and safety-related repair obligations from manufacturers. High profit levels and executive compensation within major property and casualty insurers contrast with ongoing disputes impacting shops and insureds.
Legal remedies for consumers and repairers disputing insurer denials are limited and often costly, making the reliance on OEM procedures a contentious issue with potential safety and financial implications for all stakeholders in the auto insurance claims process.